No one can accuse Utah as being part of the American mainstream. As one of the country’s most conservative states, Utah has often bucked the federal government.
Now state Rep. John Dougall wants to bring back the gold and silver standards for Utah. His bill would require the state to accept gold for financial transactions while establishing a parallel monetary system for intrastate commerce.
John Dougall
Why does Dougall want Utah to have its own monetary system?
“Fundamentally, what it comes down to is people’s concern about the fundamentally reckless policies at the federal reserve and what it does long-term to the financial standing of the country and giving folks another choice of monetary tools for their financial transactions,” Dougall said.
Of course, the U.S. could go back to the Articles of Confederation days when every state printed its own money. That did not work then, and while Dougall is not proposing that Utah have a currency exchange rate with the dollar, it is difficult to imagine how a parallel monetary system for Utah is going to make things better for the people of that state.
William McKinley ran on the gold as the nineteenth century drew to a close
Most economists dismiss returning to the days when currency was backed by gold and silver because it limits the power to direct the economy through control of the money supply. There is only so much gold and silver out there. Populations and economies grow, but a stagnant money supply creates competition for a currency rather than room for economic expansion.
Dougall thinks that if the dollar collapses, people who hoard gold and silver can rely on that to pay their taxes, fees or even a bag of groceries and a new car, as long as it is in Utah.
Since there is not a standard for gold coins, the state would need to adopt one. Private citizens could mint their own coins and use them for transactions as long as they are approved by the state.
Clearly, Dougall’s idea to give more power to Utah on financial transactions is going to create a free-wheeling system with various currencies floating around Utah. On top of that is another layer of bureaucracy. It opens an opportunity for counterfeiters to produce coins similar to private ones and leave the burden on the private citizen to determine what is genuine. While it is true that is the case now, determining fake gold coins could prove more difficult than a paper bill. It is relatively easy with a pen to mark a U.S. treasury note or look for a watermark for authenticity. That is not so easy if a dozen or so different gold coins are floating through the marketplace.
On top of that, there are other problems. How is change given for a gold coin? Is it paid with a smaller gold coin or dollars? Are people expected to carry bags of gold like they do their wallet when making a purchase?
Dougall believes there is an answer to this. Instead of carting gold ingots on a shopping trip, he envisions a special debit card linked to a gold account.
The gold would be stored in bank-like caches called “commercial cooperatives.” The gold would be protected by the now defunct Utah Defense Force. Do not confuse this with the Utah National Guard. The UDF is “distinct from the National Guard.” It operates under the orders of the governor who may institute a draft if necessary to fill its ranks.
State law gives the governor the power to requisition the Secretary of War for arms, equipment and the use of state armories and other facilities that may be needed.
In case you happen to be unfamiliar with the Secretary of War, that was the title of the Secretary of Defense prior 1947. That is a hint at the arcane nature of the UDF. It is a long ago concept that lacks much sense in today’s world. That probably makes it appropriate for protecting a financial system based on gold though.
The last time a governor tried to bring back the UDF, it was disbanded after white supremacists began to infiltrate it.
State Defense forces are nothing new. Currently, 23 states provide for them. The difference is that the states use these units to compliment the National Guard or to step in and fill their role in the state if the Guard is called into action. Dougall’s proposal gives the UDF special duties as a parallel military to the National Guard.
There probably are some good reasons to have a state defense force to supplement the National Guard. However, to create a military organization to protect Fort Knox-like vaults of gold and silver is not one of them. Then again, adding a new layer of bureaucracy to state government and complicating financial transactions is not such a great idea either.
